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AngloGold Profit Drops, Missing Estimate; Doubles Dividend

AngloGold Ashanti Ltd., the third-largest producer of the metal, more than doubled its fourth-quarter dividend even as profit missed estimates.

Shareholders will receive 2 rand (26 U.S. cents) a share for the quarter, from 90 cents for the previous three months, taking the total for last year to 3.80 rand as higher gold prices are boosting its cash flow, the Johannesburg-based company said. It may pay 1 rand a quarter this year, Chief Executive Officer Mark Cutifani said on a conference call today.

Adjusted earnings excluding one-time items fell 28 percent to 6.15 rand a share in the fourth quarter through December from 8.57 rand in the previous three months, lagging the mean estimate of seven analysts for adjusted earnings of 8.69 rand. Earnings also declined because of a $70 million provision for the Obuasi mine closure cost in Ghana, Cutifani told reporters.

Bullion rose 28 percent to an average $1,572.86 an ounce last year, its 11th year of gains. That helped mitigate the effects of a 4 percent decline in production to 4.33 million ounces last year. The company may produce 1.03 million ounces this quarter to reach 4.3 million or 4.4 million ounces this year, it said.

AngloGold has “stronger cash flows than we’ve ever seen,” Cutifani said in a statement today. Gold may trade at an average of about $1,700 to $1,850 an ounce this year and could break through $2,000, he said on the conference call.

“Our focus is on pushing our projects through the pipeline and ensuring continued strong returns for shareholders,” Cutifani said in the statement.

DRC Projects

AngloGold is looking to dig new mines in Africa and South America and extend the life of mines in South Africa to reach an annual output target of 5.5 million ounces in 2014.

It approved a $416 million life-extension project at its Mponeng mine in South Africa and the Zaaiplaats phase-two project for $395 million. In Guinea, it’s looking to double production in the next five years, Cutifani said in an interview from Johannesburg today.

The producer delayed board approval, scheduled for this month, on its Kibali and Mongbwalu projects in Democratic Republic of Congo. The board “is expected to receive the final feasibility document for approval in the coming months,” AngloGold said of Kibali in a statement today. A study on Mongbwalu will be submitted to the joint venture board for approval next month, it said.

‘Procedural’ Delays

The delays are “procedural,” are not caused by any “material” issues and won’t affect the projects’ timelines, Cutifani said in an interview today.

In South Africa, where the company mines about 40 percent of its gold, the debate about nationalizing mines has changed to one on resource rents, and royalties may rise as a result, Cutifani said.

The threat of nationalization “is not removed but I think it’s substantially diminished,” Cutifani said in the interview. AngloGold is “confident in the stability agreements” it has in Ghana, where the government has formed a committee to review so-called stability agreements, which incorporate special tax arrangements for mining companies.

AngloGold fell the most since Oct. 4, slipping 2.9 percent to 339.90 rand by the close in Johannesburg. The five-member FTSE/JSE Africa Gold Mining Index lost 1.1 percent.

Gold advanced 0.8 percent to $1,733.45 an ounce by 3:02 p.m. in London.

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